BIR Ruling

August 18, 1972 Mr. Gilberto M. Duavit Chairman, Sub-Committee on National Local Relations 1971 Constitutional Convention S i r : This refers to your letter dated February 1, 1972 requesting our comment and/or recommendation as to the advisability, feasibility and practicability of the power of local governments to impose and levy taxes and to create its own sources of revenue in the manner set forth in Section 5 of the proposed article on Local Governments in the New Constitution, a copy of which is enclosed therewith. In reply thereto, I have the honor to inform you that this Office has no objection that proceeds from the documentary stamp and national franchise taxes shall accrue to the local governments. It also does not object to the power of local governments, except provinces, to impose taxes on amusement and places of recreation. However, this Office objects to the proposal that local governments have a share of at least 30% from internal revenue taxes. The proposal, if enacted, will substantially reduce the allotment of the National Government which may not be enough to finance its operation. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue